Product and

Pricing Strategies

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 1

Product Characteristics

Types
of Products

Stages
of Products

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 2

 The Product
Continuum
Goods Ideas
Products Services

Salt Shoes VCR Auto Fast CruiseConsulting

Insurance
Education
Food

Tangible Intangible
Dominant Dominant

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 3

 Augmenting the Basic
Product
Augmented Product
Delivery After-Sale
and Credit Service
Actual Product
Brand
Features
Name

Upgrades Core Benefits Accessories

Quality
Packaging Design
Level

Installation Warranty

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 4

 Characteristics of
Service Products

Intangible
Intangible Perishable
Perishable
Quality
Quality Nature
Nature

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 5

Consumer Products

Convenience
Convenience Shopping
Shopping
Products
Products Products
Products

Specialty
Specialty Unsought
Unsought
Products
Products Products
Products

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 6

 Industrial Products
Expense
Expense Items
Items Capital
Capital Items
Items

Short-Term
Short-Term Long-Term
Long-Term

Printer
Printer Copy
Copy
Pencils
Pencils Computers
Computers
Cartridges
Cartridges Machines
Machines

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 7

Products and Their Uses
 Raw materials
 Components
 Supplies
 Installations
 Equipment
 Business services
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 8
 The Product Life Cycle
Introduction Growth Maturity Decline

In-Flight Digital Music DVD Players VCRs

Internet Players
Sales Volume (units)

Service
Sales

+
0 Profits
±
Time
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 9
Product Makeovers

Reinvigorated
Designs

Refreshed
Marketing Efforts

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 10

New Product Development

1. Screening of ideas

2. Business analysis

3. Prototype development

4. Test marketing

5. Commercialization

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 11

 Idea Generation
Customers

Competitors

Employees
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 12
 Idea Screening
Industrial Products

Feasibility Study

Consumer Products

Concept Testing

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 13

 Business Analysis
Forecast Sales

Estimate Costs

Project Profits
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 14
Prototype Development

Packaging

Marketing Mix

Production

Resources
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 15
 Test Marketing

Introduce the
Product

Monitor Customer
Reactions

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 16

 Commercialization

Production Distribution

Manufacturing Packaging

Distribution Pricing Promotion

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 17

 Product Identities
Recognizing Products Marketing Products
The Product
Brand
Specifying Products Valuing Products

Unique Name, Company or

Legal Protections
Symbol or Design Organization Brand

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 18

 Branding of
Products
Equity Name Selection Sponsorship

Brand Loyalty Brand Names National Brands

Brand Awareness Brand Marks Private Brands

Brand Preference Trademarks Generic Products

Co-Branding
Brand Insistence Public Domain
and Licensing

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 19

 Packaging and
Labeling

Function Strategy

The Product Display

Information Differentiation

Inventory Control Appeal

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 20

 Product Strategies

Product
Product Line
Line Product
Product Mix
Mix

Product
Product International
International
Expansion
Expansion Markets
Markets

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 21

 Product Line
and Product Mix

Goods or Risks or
Width Length Depth
Services Rewards

Long-Term Strengths and Managerial Financial Retail

Strategy Weaknesses Depth Resources Channel

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 22

 Product Expansion
Add Items in a Product Category Under the Same Brand Nam

Add New Products with the Same Product Name

Apply a Successful Brand Name to a New Category

Translate a Successful Brand in a Different Product Format

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 23

 International Markets
Exchange
Government Standardization Rates

Entry
Language
Requirements

Tariffs and Consumer

Trade Barriers Preferences

Business
Culture Customization Customs

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 24

Product Positioning
Features Size, ease of use, style

Services Convenience, customer support

Image Reliability, sophistication

Price Low cost or premium

Category Leading online seller

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 25
 Product
Positioning Errors

Under Over Confused

Positioning Positioning Positioning

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 26

 Developing Pricing
Strategies

Marketing
Marketing Government
Government
Objectives
Objectives Regulations
Regulations

Quality
Quality Consumer
Consumer
Perceptions
Perceptions Demand
Demand

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 27

 Cost-Based Pricing

Break-Even Analysis

Less Than Break-Even More Than

$$ Losses $$ Point $$ Profits $$

Fixed costs
Selling price per unit-Variable costs per unit

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 28

Break-Even Point Haircuts at $20
Each

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 29

Break-Even Point Haircuts at $30
Each

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 30

 Other Pricing
Strategies
Price-Based

Optimization

Skimming

Penetration
© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 31
 Price Adjustment
Strategies
Discount Pricing

Bundling

Dynamic Pricing

© Prentice Hall, 2007 Excellence in Business, 3e Chapter 13 - 32